The Nifty Metal Index witnessed a significant boost on Tuesday, gaining more than 2% during intraday trading, largely driven by strong performances from key players in the metal sector.
Stocks like National Aluminium Company (NALCO) and NMDC led the rally, with both rising by close to 5% or even higher. The upward trend was not limited to these two companies, as other major players like Steel Authority of India Ltd (SAIL), Vedanta, Tata Steel, and Hindalco also recorded substantial gains, adding momentum to the broader market’s bullish sentiment.
The surge in the metal index coincided with a strong showing from the benchmark indices. The Sensex crossed the 85,000 mark, while the Nifty-50 index approached 26,000, reflecting overall optimism in the market.
The metal stocks, in particular, benefited from a revival in demand prospects from China, the world’s largest consumer of commodities. The Chinese government’s recent economic stimulus efforts appear to have played a key role in driving the market.
China’s central bank lowered the amount of cash banks are required to hold in reserves and reduced a key interest rate to support the country’s weakening economy. This move comes amid concerns about China’s slowing economic growth and its impact on global commodity demand.
As China remains a crucial player in the global metal market, any positive economic stimulus there has the potential to lift both demand and prices for metals worldwide. As a result, Indian metal stocks reacted positively to these developments, reflecting optimism that China’s demand for metals could rebound in the near term.
Hindustan Copper, Hindustan Zinc, and Jindal Steel and Power were among the other metal stocks that posted gains during Tuesday’s session. Analysts suggest that the metal sector’s performance has been buoyed by hopes that China’s efforts to stimulate its economy will finally lead to a meaningful recovery in the sector.
While the Chinese government has implemented several piecemeal stimulus measures over the past few quarters, these efforts have not yet resulted in a substantial revival. However, the latest actions by the Chinese central bank have reignited hopes of a more sustained recovery, which would have positive implications for the global metal market.
Analysts at Anand Rathi Research noted that the Chinese government’s past stimulus efforts have not been enough to revive the sector fully. They argued that unless China undertakes more substantial stimulus measures, the near-term outlook for the metal sector could remain bleak.
Despite these concerns, the market has reacted positively to the latest developments, with metal stocks in India experiencing robust gains. The optimism is further supported by the expectation that global demand for metals will increase if China’s economic recovery gains momentum.
In addition to the optimism surrounding China’s demand, Indian steel prices have also been impacted by global trends. Steel prices in India have come under pressure due to weaker internal demand in China and increased exports from the country.
Between January and August 2024, China’s steel exports surged by 19% year-on-year to 70.72 million tonnes, according to Anand Rathi Research. This increase in exports has weighed on global steel prices, but with China’s stimulus measures now in focus, there is renewed hope that the situation will stabilize, offering some relief to Indian steel producers.
Among the individual stock performances, NMDC’s share price saw an impressive rebound, gaining as much as 4.65% during intraday trading on the BSE. The stock had previously seen a significant correction, dropping over 20% from its high earlier in the year, as iron ore prices fell from over $115 per tonne in May 2024 to around $90 per tonne.
With the latest news out of China, NMDC shares have recovered some of their losses, reflecting the market’s optimism about the future of the metal sector.
In the non-ferrous metal space, National Aluminium Company Ltd (NALCO) was the standout performer, with its share price rising by more than 5% during intraday trading. Other major players, including Vedanta Ltd and Hindalco Industries Ltd, also posted strong gains of up to 4.5% on Tuesday.
This positive movement in the non-ferrous segment is a further indication that market sentiment is turning more optimistic as investors anticipate a potential rebound in demand from China.
While the gains in the metal sector are impressive, the broader market also continued to perform well. The Sensex and Nifty indices reached new heights, with the Sensex crossing 85,000 and the Nifty nearing 26,000.
The overall market sentiment remains positive, supported by optimism about global economic conditions and the potential for recovery in key sectors such as metals.
